The Ross Valley Sanitary District has appealed for financial help to an organization that in the past it regarded as its arch nemesis.

The Ross Valley district will run out of money next month unless it finds a way to raise $2.5 million to $3 million within the next two weeks. The district has a cash flow problem because its fees are collected along with periodic property tax assessments; its next injection of revenue won't come until mid-December.

The Ross Valley district has asked the Central Marin Sanitation Agency, which treats the district's sewage, to wait until December to collect about $2 million that it owes the agency. Half of that amount was due July 1, and so far, the Central Marin Sanitation Agency has delayed cashing Ross Valley's check. The second $1 million payment is due Oct. 1.

The Central Marin Sanitation Agency board, which includes council members from Larkspur, San Rafael and Corte Madera, wants the Ross Valley district to drop pending legal action against the agency before it agrees to what would amount to a short-term loan.

"We don't like being sued and then asked for money," said former Corte Madera Councilman John Dupar, the town's representative on the board.

Earlier this year, the Ross Valley agency insisted on formal arbitration with the Central Marin agency to settle several legal issues stemming from San Quentin State Prison's decision to fire the Ross Valley district and hire the Central Marin agency to maintain a pump station at the prison and the pipes that deliver the effluent to the plant. Loss of the contract cost the Ross Valley district more than $1 million in annual revenue.

Dupar said that as part of the arbitration, the Ross Valley district has challenged the legality of the switch.

"They are saying that San Quentin is not in Central Marin's service area," Dupar said. "They're saying that we had no right to enter into that contract."

Frank Egger, president of the Ross Valley Sanitary District's board of directors, said "there have been ongoing settlement discussions. We've been trying to work out a settlement that accommodates everyone."

Dupar said he had expected the Ross Valley district board to vote on a proposed settlement agreement when it met Wednesday night in closed session; but that didn't happen.

Egger said due to missing board members at Wednesday's meeting the matter was continued until a meeting next Wednesday.

But even if the Central Marin agency grants Ross Valley's request, the sanitary district will still need another $500,000 to $1 million to plug the whole in its balance sheet, Egger said.

"We're looking at a couple of possibilities," Egger said. "I hope to be meeting with our Supervisor Katie Rice and Roy Givens from the county treasurer's office to see if there is a possibility of a bridge loan from the county. Another option is we're talking to banks."

At its meeting Wednesday night, the Ross Valley district board gave staff the green light to proceed with negotiations with Wells Fargo Bank; but Egger said the district is also talking to other banks as well.

Mary Sylla, who was elected to the Ross Valley district board in November, said, "I think we're a good credit risk at this moment because we do know we will get our property tax money from the county in December. The bigger question is what is the district going to do in the next six months to a year to make sure we can get back to work on our capital plan, which has been frozen."